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RENTON, WASH. -- The U.S. labor market has been remarkably consistent in its unremarkable performance, observes Robert Bach, director of research for the Americas with Newmark Grubb Knight Frank, following last Friday's announcement by the Bureau of Labor Statistics (BLS) that total nonfarm payroll employment rose by 217,000 in May.
"Growth has been strong enough to chip away at the slack in the supply of labor, but not strong enough to reverse the cautious psychology that persists among households and some businesses," wrote Bach in a June 6 research note titled "Back in the Black."
With the 217,000 net new payroll jobs created in May, the U.S. labor market finally recovered all of the 8.7 million jobs lost to the Great Recession. The national unemployment rate remained unchanged at 6.3 percent, the lowest level since September 2008.
"A welcome milestone, it is also a sobering reminder that the labor force has grown by 1.7 million workers since the recession began with virtually no new jobs created for them to fill, which has kept the unemployment rate above the long-term equilibrium rate of 5.5 percent," said Bach. "These totals do not count millions more who have dropped out of the labor force because they can't find work."
The good news for commercial real estate, according to Bach, is that the leasing markets continue to recover and rents are rising, albeit at a slow pace. Meanwhile, the low interest rates are expected to continue to fuel investment activity.
May marked the fourth consecutive month that employers added more than 200,000 jobs. The BLS also revised total jobs gains in April from 288,000 to 282,000, 6,000 lower than originally reported. The March total was unchanged at 203,000.
Among the job growth highlights for May:
* The three primary office-using sectors -- information, finance, and professional and business services -- added a combined 53,000 jobs, on par with the six-month average of 53,800. Bach expects the gradual recovery in the office leasing market to continue.
* Employment sectors related to demand for industrial space -- manufacturing, transportation and warehousing, and wholesale trade -- added 36,300 jobs. Most commercial real estate experts expect the industrial vacancy rate, which has returned to its pre-recession level, to fall further in coming quarters.
* Leisure and hospitality added 39,000 jobs, up from the six-month average of 28,300, signaling an extremely healthy lodging industry.
* Retailers added 12,500 jobs, down from the six-month average of 19,900. Retail employment remains 257,000 short of its pre-recession peak, a sign of the ever-growing shift of sales onto the internet, Bach points out.
* Education and health services added 63,000 jobs in May, of which 33,600 were in the healthcare subsector, reflecting demand for medical office buildings and related facilities. This is more than double the six-month average of 15,900 new healthcare jobs, a sign that providers are expanding to serve newly insured customers.
* Construction added a modest 6,000 jobs while government added 1,000 jobs.
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